Toshiba beat Hynix infringement lawsuit both sides may shake hands

On Friday, a court in Tokyo announced that it had ordered Hynix to stop selling NAND flash chips in Japan after it filed a patent lawsuit. The ruling could boost Toshiba's flash business. But Hynix said it plans to appeal the ruling.

A representative of the Tokyo district court said that the court has ordered Hynix to compensate Toshiba 7 million 840 thousand yen. Toshiba sued Hynix in a district court in 2004, accusing Hynix of infringing on its NAND chip.

Hynix has been turning its production capacity from DRAM to produce more profitable NAND products. In the last 3 months of 2005, its share of the $11 billion NAND flash market grew very rapidly, pose a threat to the status of Toshiba's top second NAND flash suppliers.

Daewoo securities analyst Chung Chang-won said that the ruling on the impact of Hynix NAND flash chip business limited. He said that due to the court ruling only affect the use of 0.11 micron process 512Mb chip, and Hynix chip production is very low, so its impact can be ignored. Hynix sales in Japan accounted for only 10% of its NAND chips. But a spokesman for Toshiba said the ruling affects many of Hynix's memory products.

Chung said that the U.S. court ruling may be more important to it, Hynix may negotiate with Toshiba before the U.S. court ruling to resolve patent disputes. In addition to Japan, Toshiba sued in the United States in 2004 Hynix infringed its 7 patents: 3 patents related to the DRAM chip, the patent is related to the 4 NAND flash chip.

Market research firm iSuppli predicts that by 2009, NAND flash market will grow by 140% to reach $26 billion 100 million, far exceeding the expected growth rate of DRAM market of 11%. This strong growth prospects to attract some of the industry giants such as Intel to enter the market, making the market more competitive.

Analysts worry that if Hynix was forced to sell the NAND chips sold in Japan to other markets, already very weak NAND prices will be under greater pressure.